Central banks accumulate gold. China, Russia and many other Asian countries started to buy a few years ago. Today, storing yellow metal is once again in fashion. Let's see what are the factors that explain this return to grace.
Recently, a new group of gold buyers appeared. These are Chinese investors. Prior to 2015, private gold ownership was restricted in China. But, from that date, the Chinese government privatized the gold property. The official figures of China's gold reserves mention 1842 tons of metal, worth 84.45 billion. These numbers are increasing steadily. In 2017, China was the world's largest consumer of gold jewelry, according to GFMS.
Russia has increased its gold reserves by more than 34 tons in the month of September 2017
Does this mean that the Chinese or Russian central bank expects gold prices to rise? No. Investors in gold might perceive this news as negative. Central banks do not accumulate yellow metal for fear of inflation. China's central bank wants to diversify its reserves, including reducing its dependence on the dollar, which constitutes the vast majority of these. China has more than $ 3 trillion in reserves. She also owns more than one trillion US bonds. In addition, it also has trillions of dollars in cash and deposits.
Iran has exploited this same strategy based on gold. When sanctions were imposed on Tehran and Iran was excluded from the international payments system in dollars, it had to turn to the old method of payments in physical gold. Recently, the Russian government adopted the same tactic after being sanctioned for its invasion of Crimea.